Mixed reactions to FITs changes

10th February 2012


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IEMA

Renewables sector unsure of DECC proposals for six-monthly cuts to the feed-in tariff (FIT) for all technologies, following confirmation that payments for solar will be linked to energy performance

Following the announcement last month of lower subsidies for solar photovoltaic (PV) panels, the energy department has now published other changes to the FIT from 1 April, including imposing an energy-efficiency performance on installations and introducing a new reduced tariff for community-scale installations.

As of 1 April, installations with more than 25 panels will receive only 80% of the full tariff, while homeowners and organisations unable to prove their building is achieving an energy performance rating of category “D” will receive subsidies of just 9p per kilowatt hour of electricity they produce (the maximum tariff available being 21p).

The government’s decision to loosen the requirement from the tougher proposal of category “C” performance has been welcomed by industry, as approximately only 13% of buildings in the UK currently reaching category C, compared to 51% that reach category D.

Alongside the immediate changes to the FIT for solar technologies, DECC has launched two new consultations outlining further changes for all technologies, including introducing a phased reduction to tariffs, which takes inspiration from the scheme used in Germany.

DECC’s proposals would seen tariffs for all technologies reduced by 5% every six months, providing the long-term certainty of income requested by the renewables sector and investors, according to energy minister Greg Barker.

“We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment,” said Barker.

“Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.”

The first of the consultations focuses specifically on solar PV, proposing further cuts of up to a third from 1 July, with a further 5% cut from 1 October followed by six-monthly reductions thereafter. It also suggests cutting the term of FITs payments from 25 years for solar to just 20 years.

In the second consultation, covering changes to the tariffs available for wind, hydro, anaerobic digestion and micro-CHP (combined heat and power), DECC proposes upping support for micro-CHP from 11p/kWh to 12.5pkWh from October, but dramatically cutting subsidies for home and business-scale wind turbines by 41% and 26% respectively.

Wind and marine trade body, RenewableUK, warned that with organisations and homeowners already struggling to gain planning permission for small wind turbines the cuts to the FIT could further hamper adoption.

“The government points to capital costs for some turbines coming down – but overall project costs have been rising across the technology sizes and manufacturers will face real dangers with the proposed cuts,” warned Dr Gordon Edge, RenewableUK director of policy.

Meanwhile, the proposals for additional support for CHP have been welcomed by others.

Don Leiper, director of new business at electricity supplier E.ON, said “The government’s support for micro-CHP is a key step towards building a mass market for what is a smarter home heating and power solution that can save customers money and contribute to saving the planet.”

The consultations will run to 3 April and 26 April respectively.

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